Has your super been stuck on 'set and forget'? Start tuning in--it's money for your retirement, so it's important. At every age!

• Jurisdiction: Australia
• Date: 01 June 2012

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Brought to you by the ANF and HESTA

Find out how Anna tunes into her super at various points in her life--from graduation to retirement--to make a real difference to her super.

Just starting out in the workforce

Anna has recently begun her career in nursing. While it's her first year as a nurse, she worked in part-time and casual roles before she completed her studies. She doesn't know much about super--after all, retirement is still a lifetime away, right? Wrong!

As the saying goes, a good start is half the battle. Taking an interest in your super early can help you avoid costly financial headaches down the track--like paying multiple fees and insurance premiums, losing track of your accounts and paying extra tax. Here's how you can get off to a good start now.

Don't end up with multiple super accounts

Even if you're just starting your career, it's likely you may already have accumulated multiple super accounts. Consider how many part-time or casual jobs you've had while studying. With all the paperwork involved in changing jobs, it's easy to forget to take your super with you to your new job.

Having more than one account means you're probably paying multiple fees. And the more you lose in unnecessary fees, the less ends up in your pocket for your retirement. Plus, you're losing the chance to earn future compound interest (interest earned on interest) on any fees saved--which can really help grow your super balance over time. So, nip unnecessary fees in the bud as early as possible by keeping just one super account and taking it with you throughout your career.

If you think you may have more than one super account, you can visit ato.gov.au/superseeker or unclaimedsuper.com.au to find out. Before combining your accounts, check for any potential drawbacks such as exit or entry fees, or loss of benefits like insurance cover.

Read your statements

Your fund sends you a member statement, usually on an annual basis, although sometimes twice a year. It's to help you understand your super and any benefits that come with it, like insurance. So get in touch with your fund if you don't understand what you receive. Check what insurance you have, if any, to make sure you could support yourself (and your family) if the worst was to happen. Becoming familiar with your super statement early may help you identify and understand any unexpected changes in future statements.

Check your fund has your TFN

If you have a tax file number (TFN), give it to your employer, and your fund, to avoid paying more tax than you need to. If your fund doesn't have your TFN you may be paying an additional 31.5% tax on your before-tax contributions (including employer contributions and salary sacrifice). That's a toss of 31.5 cents out of every dollar that could end up at the ATO rather than in your account. And you won't be eligible to make any extra after-tax contributions either.

Legally you don't have to provide your TFN, but it does make good financial sense. Check your member statement to see if your fund has a valid TFN for you. If not, contact your fund. This will not only ensure you don't pay extra tax on your contributions, it will also help you keep track of your money.

Super co-contribution--it's free money from the government!

From 1 July this year, the government will add 50 cents to every $1 you contribute (after tax) to your super, up to a maximum of $500. The maximum co-contribution reduces with every dollar you earn over $31,920, and cuts out after $46,920.

We generally end up with more financial responsibilities (such as a mortgage, or a family) as our careers progress and with age. So, finding spare cash to put into your super often becomes more difficult. Get a head start while you can, by contributing a little extra to your super--even if it's just $10 per week.

Contact your fund or visit ato.gov.au/super to find out if you're eligible for a government co-contribution.

You're building your career and your savings

Now that Anna's been nursing for a number of years and is earning more, she starts looking into what extra services her super fund offers that will help her make the most of her money.

Salary sacrifice

Salary sacrifice is the term given to contributions you make to your super from your before-tax salary.

In the 2012 Federal Budget, the government proposed some changes to the way concessional super contributions (including salary sacrifice and employer contributions made on your behalf) are taxed. This means, from 1 July 2012, your concessional contribution tax rate will depend on your income.

For those on annual incomes under $300,000, these contributions are--and will continue to be--taxed at a low 15% up to a maximum contribution cap of $25,000.

For those on annual incomes greater than $300,000, from 1 July 2012, these contributions will be taxed at 30% up to a maximum contribution cap of $25,000.

To set up a salary sacrifice arrangement, simply ask your employer to take a nominated amount out of your before-tax salary. This amount will then be added to what your employer contributes for you.

It's important you don't exceed the limits on the amount of contributions ($25,000 per year during the 2012/13 and 2013/14 financial years) you can make at a concessional tax rate. So, before you choose to salary sacrifice, seek financial advice to ensure it suits your circumstances. Some funds provide this advice free as part of their member servicing. Use the calculators at moneysmart.gov.au (or perhaps your super fund's website) to help you work out how you could benefit from making before-tax contributions.

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